(Recasts, updates prices) * Investors bet flight to safety overdone * European shares rise 0.5% ahead of ECB meeting * Treasury, Bund yields rise as calm prevails * Global currencies vs. dollar tmsnrt.rs/2PmYOcE LONDON, July 21 (Reuters) - European stocks lifted and bond prices fell across the euro area on Wednesday as investors bet an earlier flight to safety sparked by fears about the spread of the Delta coronavirus variant was overdone. With a key European Central Bank meeting on Thursday expected to convey a dovish tone and provide a further boost, the benchmark STOXX index of the region’s 600 largest shares rose 0.5%. U.S. Treasury yields rose 5 basis points (bps) in London trade and Germany’s 10-year Bund yield reversed early falls, trading 2 bps higher on the day at -0.40%, as a sense of calm crept back into European markets. ADVERTISEMENT The rally in risk assets followed an earlier rush to safe havens such as the dollar and U.S. Treasuries, as a renewed surge in infections globally displaced inflation as investors’ primary concern. “The moves had gone too far,” said Jan von Gerich, chief analyst at Nordea. “Markets have a tendency of doing that, but it’s dangerous to say it’s over for now until we see more of a stabilisation”. A slew of upbeat updates from European blue-chip firms strengthened the positive mood in stock markets, with travel and leisure stocks rallying 4% after getting hammered recently by worries about a resurgence in coronavirus cases. U.S. stocks looked unlikely to spoil the mood, with S&P 500 futures up 0.42%. Last week, data showing a surge in U.S. consumer prices in June sparked fears that the Federal Reserve could bring a quicker end to emergency stimulus measures. The shift from a debate over whether price spikes are transitory to outright fear of the impact of the latest COVID-19 surge had pushed the U.S. 10-year yield down more than 20 basis points in the space of a week as investors have moved into safe-haven assets. Gold likewise lost some of its recent safe haven lustre on Wednesday, with spot prices falling 0.28% by 1009 GMT as investors preferred the dollar. RISING INFECTIONS The more positive mood in European shares on Wednesday contrasted with a 0.02% fall in MSCI’s broadest index of Asia-Pacific shares outside Japan, as South Korea reported a daily record of new infections. Seoul’s KOSPI slid 0.52% and Hong Kong’s Hang Seng index fell 0.4%. Echoing concern in equities markets over a surge in global COVID-19 infections, the dollar stayed near three-month highs on Wednesday. “While some of the world is shrugging off rising infections as vaccination rates limit the severity of any symptoms of new cases, there are few parts of the world that can totally ignore this,” said Rob Carnell, Asia-Pacific chief economist at ING. The dollar index was last up 0.06% at 93.023, with the euro down 0.04% to $1.1754. Oil prices extended gains from the previous session as improved risk appetite provided support despite data showing an unexpected rise in U.S. oil inventories last week and a weaker demand outlook due to rising COVID-19 infections. Brent crude futures gained 84 cents, or 1.2%, to $70.19 a barrel at 1021 GMT, having hit a session low of $68.63. Reporting by Andrew Galbraith and Lawrence White; Editing by Christopher Cushing, Kim Coghill, Catherine Evans and Timothy Heritage For Reuters Live Markets blog on European and UK stock markets, please click on: Our Standards: The Thomson Reuters Trust Principles.